Many(including myself) have been amazed by the size and scope of this rally. I realized long ago that our current market is basically a casino right now that's based on ZERO fundamentals. However, the fact that I know this doesn't make the tape any easier to trade.
I have seen more frustration and anger on the trading sites that I frequent over the past few weeks than I have at any other time since our economic collapse began.
I picked up a chart that may help explain why the tape has been so difficult and thus frustrating to trade:
As you can see above, we(the retail investor) are becoming less and less relevant to the stock market as a whole.
You need to ask yourself a very humbling question after seeing this chart: Do you as a retail investor even matter anymore?
Many of us continue to hop on various websites searching for someone that has the answer as to why the market is doing what it is doing.
I finally now have the answer. If you aren't in "the know" you have no chance. The market is no longer a discounting mechanism that uses fundamentals and P/E ratio's to come up with fair values for stocks.
THE NYSE IS NO LONGER A MARKET!
ITS A CASINO THAT'S BEING GAMED BY THE HEDGE FUNDS, THE FED, AND OTHER LARGE INSTITUTIONAL INVESTORS!
Unless you are one of the lucky owners of one of the Goldman/JP Morgan Crackberries that's on the receiving end of hearing what the Fed's next move is, you are screwed because the "lowlife" retail investor doesn't get the information until the pigmen have already already placed their bets. The money has been made long before you "the retailer" hears the news on Bubblevision.
The stock market is officially a sham. The rally from the bottom all got started with the "Big 3" banks all coming out at the same time and announcing that business was much better during Feb.
This got the market rolling and the pigmen never looked back. The banks proceeded to go on a stock market buying spree which took many by complete surprise including even some of the quants. In doing so, the banks were able to manipulate their stock values up to levels that allowed them to do stock offerings and raise capital at much higher prices which resulted in much less dilution.
The lies and manipulation kept on rolling after this one: "Green Shoots" started popping up all over the place. All of the sudden signs of the "great recovery" were everywhere! Stocks began to cheer when they saw home sales rise 3% in March.
3%? Are you kidding me? After a 30% drop? Big dipty doo! Is this is a green shoot or a minor blip on the radar as we roll right towards The Greatest Depression?
The more I reflect on our current great recovery the more I see how blatantly Wall St manipulated all of us. The rising market share of the institutional investor is absolutely frightening to me.
Why? Because you don't know what they plan on doing next! They know there is no real recovery. The whole thing is a total sham.
As a result, you need to ask yourself a question:
What if one day they decide to push the sell button and start selling to the clueless retail investor's that think the rally is real after a 30% move to the upside?
Hell, Goldman and the rest of the boys won't even hesitate to go short while they are in the process of selling you their holdings after a nice rally. The market will then roll over and once again the little guy gets screwed while the banks make another mint on the short side.
If the big trading desks don't burn you in this manipulated market the Fed certainly will. If the Fed decides its going to pull liquidity from the market, I am sure the boys will get a "heads up". They will then once again reach for the sell button and start dumping shares. Who are they selling to? YOU OF COURSE! God forbid they get left holding the bag.
Either way you are playing a game that's stacked against you. The only thing I can compare it to is a casino. You are betting against "the house" anytime you make a trade right now. What's different about investing in this cesspool today is "The House" never held all of the cards like it does now. The retail investor has shrunk from 80% in the early 1980's down to 30% today.
Gee, do you think it's coincidental that we saw the greatest bull market in history as the retail investor shrunk in influence and power?
You never want to invest in a market where the fundamentals don't matter. If the markets being gamed and you aren't in the loop stay away!
My advice? Try and trade in markets like the bond market where there is at least some transparency. Can you still get gamed here by the Fed and QE? Yes, but its a lot larger market which makes it more difficult to manipulate.
The traders in Chicago are much more sophisticated and transparent. I am involved much more in the credit markets than I am in equities at this point. I am short treasuries as many of you well know. The bond vigilantes appear to be out fighting the Fed which is an excellent sign. The credit markets are the ONLY guys that can stop the endless spending by the Fed.
It appears they are ready to do battle despite a slight pullback today. The dollar continues to vanish and commodities continue to soar as a result.
The bulls are trying to spin this by saying commodities are up because the economy is recovering! Yeah Right! Not! Its a sign that our dollar is collapsing as a result of our obsessive spending. All of this will eventually force the Fed to stop the music. If they don't I hope you enjoy that $20 loaf of bread at your grocery store.
Remember, the Fed is killing our dollar everytime they QE. They are monetizing debt or "printing" everytime they do this. The more the Fed QE's, the more pressure you will see on the greenback.
As for stocks? Need I say anymore? When the pigmen control 70% of the game "No thanks I'll pass".
The problem the banksters have here is EVENTUALLY the fundamentals always matter. You can only fix this game so long before you run out of money.
Wall St will eventually run out of cash because the economy sucks. The only reason we have any liquidity in this market is because the Fed is stuffing everyone with cash. The bond market is about to end this game so buyer beware.
Once the liquidity runs dry in the markets it's going to be an absolute bloodbath. It's impossible to know when this turn date will be but my guess is it's sooner rather than later.
If you dabble long "stay nimble". The recovery is nothing but a marketing ploy for Wall St. Once they have sucked everything that they can out of this rally, the boys will get out by selling to you!
Don't be the fool that's left holding the bag of stocks.